€120 billion lost to corruption in EU each year

An estimated €120 billion is lost to corruption each year throughout the 27 member states, the EU commissioner for home affairs Cecilia Malmstrom has said.

“In public procurement, studies suggest that up to 20 to 25 percent of the public contracts’ value may be lost to corruption,” said Malmstrom on Tuesday (5 March) at an anti-corruption seminar in Göteborg, Sweden.

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The Berlin-based Transparency International (TI) noted in a report out in the 2012 that the worse offenders in public procurement cases are Bulgaria, the Czech Republic, Italy, Romania and Slovakia.

Public procurement contracts in the EU have an estimated worth of around 15 percent of the EU’s total GDP.

But EU legislation designed to ensure good governance on the contracts are often flouted, says TI. In some cases, the complexities of the laws and administrative burdens provide an additional incentive to find loopholes.

As an example, the transparency group found that three out of five managers of small companies in the Czech Republic believe they have to resort to bribery and kickbacks to win a public contract.

Europe’s poorest nation Bulgaria does not publish final procurement contracts. This practice is also common in Italy, notes the group.

In some cases, member states rolled back progress on fighting corruption after joining the Union.

TI says corruption-fighting practices in the Czech Republic, Hungary and Slovakia have all weakened since EU accession.

It also notes that Greece, Italy, Portugal and Spain have serious deficits in public sector accountability.

“The links between corruption and ongoing-financial and fiscal crisis in these countries can no longer be ignored,” says TI.

The European Commission hopes to spur political will among member state leaders to tackle the problem by publishing an anti-corruption report later this year.

The report will address corruption trends across the EU and the policies in place to fight it.

Malmstrom said the report, by rendering public corruption practices in individual member states, will “to some extent, stimulate political commitment to fight corruption more vigorously.”

Meanwhile, Finland on Tuesday cited corruption as the primary reason why it too, along with Germany, will block Romania and Bulgaria’s bid to join the passport-free Schengen zone, reports Finish state-broadcaster Yle.

“Too many questions were left unanswered which we now have to deal with,” said Finland’s Interior minister Päivi Räsänen.

EU ministers of interior are meeting in Brussels on Thursday and Friday to discuss the issue, among others.